HCM TECHNOLOGY SECTOR REVIEW | Q4 2019 · robust transaction volume in Q4 2019 • HCM technology companies continue to attract attention from both strategic and financial acquirers

HCM TECHNOLOGY SECTOR REVIEW | Q4 2019

T E C H N O L O G Y , M E D I A & T E L E C O M PAGE | 1

HUMAN CAPITAL MANAGEMENT TECHNOLOGY SECTOR REVIEW | Q4 2019

• 35+ professionals across Boston, San Francisco, and London

H A R R I S W I L L I A M S ( “ H W ” ) T E C H N O L O G Y , M E D I A & T E L E C O M ( “ T M T ” ) G R O U P

• 370+ professionals across eight offices globally

• 170+ closed transactions in the last 24 months

• 10 industry groupsH O R I Z O N T A L F O C U S S E C T O R S

• Compliance Software

• CRM and Member Management Software

• Data & Analytics

• Enterprise Software

• Human Capital Management

• Infrastructure & Security Software

• IT & Tech Enabled Services

• Managed Services, Hosting & Data Center Solutions

• Online Marketing, Data & Research

V E R T I C A L F O C U S S E C T O R S

• Architecture, Engineering & Construction

• eCommerce & Retail Software

• Education Technology

• Energy Technology

• Facilities & Real Estate Technology

• Financial Technology

• Government Technology

• Healthcare IT

• Industrial & Supply Chain Software

A N D Y L E E D+1 415-217-3420

T Y L E R D E W I N G+1 617-654-2133

D A N L I N S A L A T A+1 617-654-2122

S A M H E N D L E R+1 617-654-2117

P R I Y A N K A N A I T H A N I+1 617-654-2115

M I K E W I L K I N S+1 415-217-3411

T H I E R R Y M O N J A U Z E+44 20 7518 8901

J U L I E N O U S S A D O N+44 20 7518 8909

S E L E C T R E C E N T H W H C M T E C H N O L O G Y T R A N S A C T I O N S

Offers courses for healthcare professionals and healthcare organizations and provides an online business-education library

has been acquired by

Provider of Workforce Management, Training, and Compliance Solutions for the Healthcare, Financial Services, and Real Estate Industries


Employee scheduling solutions for retail and hospitality sectors


Provider of time and attendance management, staff scheduling, payroll and security management software products

has made a majority investment in

Developer of business management software for businesses and non-profit organizations in the United Kingdom

has received a majority investment

from

Developer of business management software for businesses and non-profit organizations in the United Kingdom

has acquired a majority stake in

Provider of administration software, rules-based online benefits enrollment, data integration, medical and voluntary benefits, broker and HR admin dashboards


E R I K S Z Y N D L A R+1 415-217-3418

Provider of GRC SaaS solutions including credential management and payer enrollment services to healthcare facilities

has acquired

Provider of fully integrated, SaaS-based operator qualification (OQ); drug and alcohol; safety and insurance; and training solutions across multiple end-markets


Provider of an environmental, health and safety compliance and training platform for organizations in high-risk, highly regulated end markets




Solutions focused on sourcing, recruiting, interviewing, and onboarding employees to an

organization

• Employee recruitment, engagement, and retention remain top of mind – especially as job market tightens

• Data-driven / marketplace tools are increasing connectivity for both enterprises and their contingent / on-demand workers

• Talent tools adopting machine learning, predictive analytics, assessment algorithms, and artificial intelligence

• Real-time employee review solutions gaining traction (social, collaboration management, rewards)

• Identification and recruitment of internal and known talent are corporate strategic initiatives

• Learning management systems and corporate learning, training and compliance content increasingly core to HR suite

Solutions focused on optimizing the efficiency and productivity of an

organization’s employees

• “Workforce as a Strategy” is increasingly driving companies to adopt data-driven technologies that remove friction from the employee journey

• Benefits and payroll solutions are fundamental to employee / employer connectivity, with engagement and wellness proliferating

• HRIS automation is table stakes as employers now shifting focus to productivity and collaboration enhancers

• Automated and comprehensive risk management / compliance tools continue to experience strong adoption

• Back office HR capabilities for on-demand labor market are an emerging market opportunity

• Leading vertical-specific platforms remain highly attractive to investors and acquirers (e.g., retail, healthcare, and hospitality)



• Personal & Informatik (P&I) provides HR and payroll software and solutions to customers across Germany, Switzerland, and Austria

• The Company’s software and solutions, including its HR task simplification and automation solutions, are currently utilized by over 15,000 customers

• The majority selling shareholder, Permira, will remain a minority investor in P&I as Hg Capital will invest additional capital to further growth and geographic expansion of the Company

EV: $2.2B

Rev: Confidential EV / EBITDA: Confidential

EV / Rev: Confidential

• Aspiring Minds provides assessments and credentialing solutions utilizing AI, psychometry, and science to over 3,000 companies and institutions

• The Company’s primary solutions include coding, language, video interview, and skills tests and are driven by industry-leading AI-powered technology

• With the acquisition of Aspiring Minds, SHL further bolsters its existing comprehensive portfolio of innovative assessments and AI capabilities

EV: Confidential



• PrismHR provides payroll, benefits, and HR software and solutions for small and medium-sized businesses across the U.S.

• The Company’s solutions are utilized by more than 80,000 organizations and over 2M worksite employees, processing in excess of $80 billion in payroll each year

• With the acquisition of PrismHR, Stone Point will leverage its PEO, employee benefits, and HR technology experience to accelerate the Company’s growth across small and medium-sized businesses

EV: Confidential



• First Advantage provides background check, driver compliance, fingerprinting, and drug screening software and solutions

• The Company’s global technology platform integrates with HR and talent management solutions with a geographic presence in over 200 countries and territories

• SilverLake will leverage a mix of technology expertise, industry relationships, capital availability, and global reach to further expand First Advantage’s market share and geographic presence

• Engage Talent provides predictive analytics and artificial intelligence (AI) to help customers find, engage, hire, and retain the top candidates

• The Company’s real-time predictive recruiting and retention decision making software is relied on by global industry leaders such as Allstate, Dell, and Saint Gobain

• Through the acquisition of Engage, Workforce Logiq will make recruitment and retention data science capabilities available to the talent supply chain

EV: Confidential



EV: Confidential





4 4

8

2

4 4

3

10

• The key strategic acquirers have combined for 39 HCM technology related acquisitions since 2015

• Key strategics accounted for two of the HCM Technology deals in Q4 YTD 2019

• Workday and Kronos have established a consistent HCM M&A strategy, accounting for 18 transactions for the last four years including two in Q4 19 (Kronos acquired Optimum, Workday acquired Scout RFP)

MOST ACTIVE STRATEGIC ACQUIRERS OF HCM TECHNOLOGY ASSETS BY VOLUME1

GLOBAL HCM TECHNOLOGY M&A ACTIVITY1

• There were 27 HCM Technology acquisitions in Q4 2019 bringing the 2019 total to 114

• The HCM technology space maintained steady, robust transaction volume in Q4 2019

• HCM technology companies continue to attract attention from both strategic and financial acquirers

1217

10 914 11 14 12

1726

3830

21

3531

27

41

5244

48 5044

48 51 54

69

93

111115

124 117 114

Q1 - 16 Q2 - 16 Q3 - 16 Q4 - 16 Q1 - 17 Q2 - 17 Q3 - 17 Q4 - 17 Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 Q2- 19 Q3- 19 Q4- 19

HCM Deals Trailing LTM



Diversified Platforms

ERP Focused Platforms

R E P R E S E N T A T I V E P R O V I D E R S

Focused Solutions

To receive the latest Human Capital Management Technology market

map, please contact HW at [email protected]

mailto:[email protected]



60708090

100110

120130140150

Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20

S&P 500 Diversified Platforms

60

80

100

120

140

160

180

200


S&P 500 Benefits Technology

HR

SO

FT

WA

RE

EV / 2019P EBITDA

EV / 2019P Revenue

1.1x 16.8x5.7x

4.9x 47.2x22.6x

BE

NE

FIT

S T

EC

HN

OLO

GY

EV / 2019P EBITDA

EV / 2019P Revenue

1.2x 7.9x2.6x

24.4x 32.0x28.2x

DIV

ER

SIF

IED

PLA

TF

OR

MS

EV / 2019P EBITDA

EV / 2019P Revenue

5.0x 7.8x5.2x

10.7x 17.7x14.5x

60

80

100

120

140

160

180

200


S&P 500 HR Software



Microsoft Corporation MSFT 1,152,024 1,203,063 (1.2%) 55.3% 153.8% 12.3% 11.3% 43.9% 7.8x 17.7x 27.5x

Oracle Corporation ORCL 200,416 169,941 (12.4%) 17.3% 37.8% (0.3%) 2.1% 46.4% 5.0x 10.7x 18.4x

SAP SE SAP 172,356 160,451 (3.7%) 33.9% 53.8% 10.3% 7.0% 35.9% 5.2x 14.5x 41.4x

Diversif ied Platforms Median $200,416 $169,941 (3.7%) 33.9% 53.8% 10.3% 7 .0% 43.9% 5.2x 14.5x 27 .5x

HealthEquity, Inc. HQY 6,483 5,250 (12.9%) 24.2% 82.8% 83.4% 56.9% 32.3% 7.9x 24.4x 40.7x

Benefitfocus, Inc. BNFT 872 718 (63.8%) (52.0%) (26.1%) 15.2% 14.4% 8.0% 2.6x 32.0x NM

Castlight Health, Inc. CSLT 159 194 (68.0%) (38.7%) (73.1%) (8.0%) (4.8%) NM 1.2x NM NM

Benefits Technology Median $872 $718 (63.8%) (38.7%) (26.1%) 15.2% 14.4% 20.2% 2.6x 28.2x 40.7x

Automatic Data Processing, Inc. ADP 75,466 73,775 (2.3%) 30.0% 65.9% 5.6% 6.5% 26.4% 4.9x 18.5x 30.8x

Workday, Inc. WDAY 38,458 37,824 (27.5%) 3.0% 148.8% 28.6% 20.4% 21.4% 8.8x 41.3x NM

Paychex, Inc. PAYX 30,990 30,484 (3.8%) 30.6% 39.7% 16.5% 5.7% 41.3% 7.3x 17.6x 29.5x

Paycom Software, Inc. PAYC 15,217 15,265 (5.4%) 116.2% 482.0% 31.2% 23.6% 42.5% 16.8x 39.4x NM

Ceridian HCM Holding Inc. CDAY 10,214 9,773 (1.1%) 96.8% NM 10.9% 12.6% 23.4% 11.0x 47.2x NM

Paylocity Holding Corporation PCTY 6,585 6,465 (1.5%) 100.7% 302.6% 24.5% 19.6% 28.9% 10.6x 36.9x NM

Cornerstone OnDemand, Inc. CSOD 3,755 3,555 (6.6%) 16.1% 38.4% 8.2% 14.1% 25.4% 5.7x 22.6x NM

Pluralsight, Inc. PS 1,885 1,752 (51.8%) (26.9%) NM 36.8% 25.5% NM 4.8x NM 8.6x

Upwork Inc. UPWK 1,207 1,195 (57.3%) (41.1%) NM 19.8% 18.6% 2.4% 3.4x NM NM

Asure Software, Inc. ASUR 244 128 (20.2%) 61.0% (3.9%) (18.0%) 0.1% 15.9% 3.4x 21.2x NM

DHI Group, Inc. DHX 169 149 (32.2%) 98.0% (51.8%) (7.8%) 3.1% 22.3% 1.1x 4.9x 24.0x

HR Software Median $6,585 $6,465 (6.6%) 30.6% 52.8% 16.5% 14.1% 24.4% 5.7x 22.6x 26.8x

Note: Margins less than 0% and multiples greater than 75x are considered Not Meaningful (“NM”)

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PUBLIC COMPARABLES2

As of Dec. 31, 2019 ($ in millions)

H U M A N R E S O U R C E S S O F T W A R E

D I V E R S I F I E D P L A T F O R M S

B E N E F I T S T E C H N O L O G Y

Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth 2019P EBITDA Enterprise Value / Price /

Company Ticker Value Capitalization Week High Performance Performance 2018 2019 Margin '19 Rev. '19 EBITDA Earnings



–

SELECT RECENT M&A TRANSACTIONS2

Announced Date Target/Issuer Buyer Descr iption Enterpr i se Value ($m)

12/23/2019 P&I Personal & Informatik HgCapital LLP Developer of human resource management software $2,217.8

12/11/2019 WhistleB NAVEX Global Provides whistleblowing solution and an incident management software NA

12/02/2019 PrismHR Stone Point Capital & Summit Partners Develops enterprise software solutions to help human resource outsourcing (HRO) organizations NA

11/25/2019 First Advantage Corporation Silver Lake Develops background screening, identity, and information solutions NA

11/12/2019 Capital Region Benefits Alera Group Provides insurance services NA

11/05/2019 Soliant Health Olympus Partners Provides healthcare staffing solutions $612.0

11/05/2019 Assets of HR inTune Alera Group Alera Group acquired assets the human resource consulting business of HR inTune NA

11/04/2019 Scout RFP Workday Operates a sourcing platform that automates the enterprise buying process for buyers and suppliers $540.0

11/04/2019 SmashFly Technologies Symphony Talent Provides a SaaS-based recruitment-marketing platform NA

10/30/2019 EngageTalent Workforce Logiq Develops an artificial intelligence recruiting platform NA

10/24/2019 Talent Response McLean Intelligent Workforce Operates an online job listing platform for independent consultants NA

10/22/2019 Aspiring Minds Assessment SHL Group Provider of recruitment platform designed to offer employability evaluation and certification services NA

10/16/2019 Axion Health Cority Software Provides occupational health management and occupational medicine clinic software solutions NA

10/02/2019 J-SCREEN K.K./Peoplecheck HireRight J-Screen K.K. and Peoplecheck provide background screening software solutions NA

10/02/2019 Optimum Solutions Kronos Provides payroll, human resources (HR), and time and attendance software solutions NA

10/01/2019 InGenius Software Upland Software Provides telephony and custom software products $22.2

10/01/2019 Erecruit Holdings Bullhorn Develops enterprise staffing software, vendor management systems (VMS), and onboarding software NA



Note: Financial information presented above represents reported capital raised only.

11/14/19 Series B $65 $108 Kleiner Perkins, Sapphire Ventures, ICONIQ CapitalDeveloper of a cloud-based artificial intelligence platform designed to

solve IT issues

11/11/19 Series C $70 $11 Redpoint VenturesDeveloper of an integration platform designed to automate key

business processes

11/05/19 Series A $45 $51 Bessemer Venture Partners, Insight Partners Provider of a global workforce management platform

10/29/19 Series B $23 $32 DCM Ventures Developer of hiring automation software for hourly workers

10/24/19 PE Growth $32 $75 Goldman Sachs, One Peak Partners Operator of an online staffing platform for employers and job seekers

10/22/19 Series B $30 $60 General Atlantic, JMI EquityProvider of corporate social responsibility and employee engagement

software

10/22/19 Series B $16 $29 Mubadala Ventures Provider of a cloud-based insurance processing automation platform

10/10/19 Series B $15 $27 Edison PartnersDevelops a software platform that uses employee surveys to score

how an employer performs

10/06/19 Series B $27 $42 Costanoa Ventures, Ally Ventures Developer of a Health Savings Accounts (HSA) platform for employees

10/01/19 Series A $53 $57 Sapphire Ventures, Capital One Growth Ventures Provider of human capital consulting and research services

10/01/19 PE Growth Confidential Confidential LLR Partners Developer of an employee health benefits platform



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HCM TECHNOLOGY SECTOR REVIEW | Q4 2019 · robust transaction volume in Q4 2019 • HCM technology companies continue to attract attention from both strategic and financial acquirers

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